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Facebook’s Ad Business Weakens In COVID-19 Hit Countries

Mar 27, 2020, 11:03 IST

SAN FRANCISCO: Facebook has admitted that its ad business has been adversely affected in countries severely hit by the novel coronavirus while non-business engagement like messaging has exploded which is affecting its services like Messenger and WhatsApp.

The coronavirus outbreak could wipe out more than $44 billion in global ad revenue for the tech giants Facebook and Google in 2020 as digital advertising runs dry, a new report has predicted. According to global investment bank and financial services company Cowen & Co., Google’s total net revenue is projected to be about $127.5 billion -- down $28.6 billion. Facebook’s ad revenue for 2020 is forecast at $67.8 billion -- a decrease of $15.7 billion, Variety reported on Thursday, quoting Cowen’s data.

However, Facebook’s advertising business is projected to “bounce back” in 2021, growing 23 per cent (year-over-year) to $83 billion, said the Cowen analyst team.

As countries after countries announce total lockdown, internet usage has exponentially grown in the past few days, forcing tech companies like Amazon, Netflix, Apple and Google to lower their video quality to let the services up and running. "Our business is being adversely affected like so many others around the world. We don't monetize many of the services where we're seeing increased engagement, and we've seen a weakening in our ads business in countries taking aggressive actions to reduce the spread of COVID-19," said Alex Schultz, VP of Analytics and Jay Parikh, VP of Engineering, in a statement on Tuesday. Much of the increased traffic is happening on Facebook's messaging services. "As the pandemic expands and more people practice physically distancing themselves from one another, this has also meant that many more people are using our apps.

Similarly, in places hit hardest by the virus, voice and video calling have more than doubled on Messenger and WhatsApp. In Italy, specifically, Facebook has seen up to 70 per cent more time spent across its apps since the crisis arrived in the country. Instagram and Facebook Live views doubled in a week. "We have also seen messaging increase over 50 per cent and time in group calling (calls with three or more participants) increase by over 1,000 per cent during the last month," in Italy, Parikh said.

The usage growth from COVID-19 is unprecedented across the industry, it said, adding that Facebook is experiencing new records in usage almost every day. "We are working to keep our apps running smoothly while also prioritizing features such as our COVID-19 Information Center on Facebook as well as the World Health Organization's Health Alert on WhatsApp. We're monitoring usage patterns carefully, making our systems more efficient, and adding capacity as required," Parikh informed. (IANS)